New Home Sales and Durable Goods Order

We had two economic reports today. The first said that sales of new homes rose 7.9% last month. This was nice to see because sales had dropped sharply in July. Since mortgage rates have risen, analysts have been looking for evidence of weakness in the housing sector. While there have been some bumps, there’s no evidence yet of a broad downturn in housing. Homebuilder confidence is at an eight-year high. In the past year, sales of new homes are up 12.6%.

The number of new homes available for sale rose 3.6 percent from July to 175,000. That’s still relatively lean — at the August sales’ pace it would take five months to exhaust the supply.

The median price of a new home sold in August fell 0.7 percent from July to $254,600.

Sales rose in all but one region of the country in August, increasing 19.6 percent in the Midwest, 15.3 percent in the South and 8.8 percent in the Northeast. Sales plunged 14.6 percent in the West, the second straight month of double-digit declines.

The Commerce Department reported that durable goods (items expected to last at least three years) rose 0.1% in August. Like new home sales, this was a turnaround from a drop in July when durable goods fell 8.1%. Much of that drop was due to a fall in aircraft orders.

The August orders were held back by a decline in demand for defense aircraft and other military goods. That could be related to steep government spending cuts that took effect in March. Excluding defense spending, orders rose 0.5%.

Auto factories reported a 2.4% increase in orders, the biggest in six months.

And orders for so-called core capital goods rose 1.5%, after falling 3.3% the previous month. Core capital goods are a good measure of businesses’ confidence in the economy and include items that point to expansion, such as machinery and computers.

Durable goods shipments rose 0.9% in August, after two months of declines. The shipments figures are used to calculate economic growth.

Posted by on September 25th, 2013 at 11:15 am


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